The firm pays the bank the price agreed on in the forward contract: 0.02545 x 2,000,000 or
$ 50,900. The firm experiences a loss on the contract because the forward price is greater than the spot rate at the time the baht payment must be made. If it had paid at the spot rate at the time the money was due, it would only have paid 2,000,000 x 0.02528 = $50,560.

The difference caused by the differences in recognition of warranty expense is the only item that is a timing difference. The others are all permanent differences.

Based on money market yield:0.0295 = [(100,000 - P)/P] x (360/30) => P =
1 00,000/[1+0.0295/12] = 99,754.8
Bank discount yield = [(100,000 - 99,754.8)/100,000] x (360/30) = 0.0294, or 2.94%.

Both of these statements are true. The law of comparative advantage implies that trading partners can be made better off if each specializes in the production of goods for which it is a low opportunity cost producer and trades for those goods for which it is a high opportunity cost producer. This situation will lead to a minimization of costs and a maximization of output. There must be differences in the relative prices of products across countries in order for this comparative advantage to be realized.
This is because the price of a good reflects the production costs. If all production costs were equal across countries then there would be no incentive to trade since each country can produce with equal efficiency.